US nonfarm payrolls increased 126,000 in March, so a clear give back from the previous month’s strength. Private payrolls increased 129,000 and government employment declined 3,000. The net revision to January and February is -69,000, so the average monthly job gain over the past three months is now 197,000, which is on the low side of what the FOMC would like to see before a rate hike. Details suggest there was some weather impact, as construction employment declined 1,000, after increasing around 35,000 per month in the previous four months. The unemployment rate held steady at 5.5%, as household survey employment increased 34,000, while the labour force declined 96,000 and the participation rate declined to 62.7% from 62.8%. “Looking through the weather effect, which we estimate led to a drag of around 35,000 in March, and adding that payrolls have been extraordinarily strong in the past few months, we are not too worried about the March report. If our view that Q1 weakness in GDP growth is primarily caused by temporary factors is correct, payrolls should pick up again to an above-200,000 pace on average over the next few months. In our view, this would leave the FOMC on track to deliver a first rate hike in September.” – says Danske Bank
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